Correlation Between Aqr Large and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Aqr Large and Goldman Sachs at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aqr Large and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aqr Large Cap and Goldman Sachs Large, you can compare the effects of market volatilities on Aqr Large and Goldman Sachs and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aqr Large with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqr Large and Goldman Sachs.

Diversification Opportunities for Aqr Large and Goldman Sachs

0.98

Correlation Coefficient

Aqr Large  Goldman Sachs

Almost no diversification

The 3 months correlation between Aqr and GOLDMAN is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Large Cap and Goldman Sachs Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Large and Aqr Large is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aqr Large Cap are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Large has no effect on the direction of Aqr Large i.e., Aqr Large and Goldman Sachs go up and down completely randomly.

Pair Corralation between Aqr Large and Goldman Sachs

Assuming the 90 days horizon Aqr Large is expected to generate 1.15 times less return on investment than Goldman Sachs. In addition to that, Aqr Large is 1.05 times more volatile than Goldman Sachs Large. It trades about 0.08 of its total potential returns per unit of risk. Goldman Sachs Large is currently generating about 0.09 per unit of volatility. If you would invest  2,620  in Goldman Sachs Large on August 31, 2024 and sell it today you would earn a total of  1,082  from holding Goldman Sachs Large or generate 41.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.73%
Values	Daily Returns

Aqr Large Cap  vs.  Goldman Sachs Large

Aqr Large Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Large Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Large showed solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Large

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Large are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Aqr Large and Goldman Sachs

The main advantage of trading using opposite Aqr Large and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqr Large position performs unexpectedly, Goldman Sachs can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.

The idea behind Aqr Large Cap and Goldman Sachs Large pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.